Following an influx of capital in the early COVID-19 pandemic, the biotech sector entered a sustained investment slump. Now the industry finally appears to be signalling renewed momentum. There has been a sharp rebound in the number of IPOs since the start of 2026. In addition, M&A deal values have risen 71% year-over-year to $22.8 billion, as per a GlobalData report.
GlobalData is the parent company of Pharmaceutical Technology.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
While sentiment toward biotech funding has improved, US tariffs, geopolitical turbulence, and looming patent cliffs continue to rock the industry, as per the report. Meanwhile, instability and controversies at the FDA remain in the headlines.
Pharmaceutical Technology caught up with several biotech executives to uncover what companies are viewing as their biggest wins and challenges and how they are navigating the ever-changing regulatory and funding landscapes.
FDA uncertainty fosters mixed responses
Reports of turbulence and exits from high-profile officials have plagued the FDA in recent months. Notably, in May, Dr. Marty Makary resigned as FDA commissioner, following reports of disagreement with President Donald Trump, and later Tracy Beth Høeg was ousted from her role as acting lead of the FDA’s Center for Drug Evaluation and Research (CDER).
Despite these rapid changes in senior management at health agencies, CEO of the neurodegenerative disease-focused biotech Cognition Therapeutics, Lisa Ricciardi, speaks of a “positive and supportive relationship with the FDA.” In a type C meeting in January, the FDA advised the company to pivot away from its original proposal of using a global composite outcome in a registrational program toward one focused on the neuropsychiatric domain, where its data was strongest. Ricciardi describes this as “excellent advice” and says their experience has been “very constructive.” Moreover, their request for a meeting was met within 30 days, and post-meeting written responses were received on schedule, she says.
“Despite what we all read about what’s going on there, these are people really committed to helping companies, [at] least in our experience,” she says.
While this experience illustrates effective day-to-day functioning of the FDA, there remain concerns in the industry around the future of rare disease research.
Despite several promising new guidance documents in the rare disease space over the last year, the FDA has continued to face scrutiny over its handling of real-world cases. In one highly publicised case, uniQure received a surprise setback for its Huntington’s disease gene therapy when the regulator contested the company’s external-control trial design strategy. Entangled with the controversy, news of Dr. Vinay Prasad’s exit as head of the Center for Biologics Evaluation and Research (CBER) came in March 2026.
More recently, a rare disease advocacy group shared an open letter calling on the Trump administration to provide regulatory clarity, pointing to reduced flexibility in drug approvals, as per Reuters.
Uncertainties and vagaries around the FDA’s approach to rare diseases have, in part, led the preclinical stage biotech Armatus Biotoconsider to consider an ex-US approach for its first-in-human studies, says CEO Rachel Salzman. In tandem, the proactive measures by countries like China and Australia to enhance their attractiveness as clinical trial destinations are another factor, she explains. The Columbus, Ohio-headquartered company is focused on leveraging vectorised RNA interference (RNAi) for the treatment of neurological and neuromuscular diseases.
Australia is a known hotspot for early-stage trials, driven by rapid regulatory timelines and incentives such as the government’s tax relief scheme. Meanwhile, China continues to assert its competitiveness in the R&D space, accounting for 22% of global drugs in development, as per the report by GlobalData. In addition, the report identifies China as a leader in per-patient trial cost efficiency, and the US as the most expensive.
Regional niches shape the funding environment
The UK’s eroded foothold in the global drug development sector is also an ongoing topic of consideration for biotechs. In a bid to enhance the region’s competitiveness, the UK government has rolled out several initiatives, including the Life Sciences Sector plan, designed to enhance manufacturing and commercial opportunities, and regulatory reform, which seeks to attract clinical trial opportunities.
Overall, sentiment remains largely positive towards the UK’s early-stage investment environment, built on a bedrock of innovation heritage. The UK is very good for smaller venture capital (VC) investments, notes Léa Wenger, CEO of the UK-headquartered women’s health biotech Cyclana Bio.
However, not all biotech executives share this enthusiasm. “I’m very disappointed in early biotech investment in the UK, and particularly in Scotland,” contrasts Declan Doogan, Executive Chairman of of Glasgow, Scotland-headquartered biotech Causeway Therapeutics. Despite a strong biotech presence in Scotland, there is not enough capital to meet the demand, he explains. Nonetheless, he notes that the regional VC sector is emerging and acknowledges Scottish Enterprise as a useful resource.
The EU also has its sights set on clinical trial reform, with hopes that the EU Clinical Trials Regulation (EU CTR), which came into effect in early 2022, will promote a more fertile environment for R&D.
Indeed, European VCs are making strides with bigger investments in the pre-seed space, according to Wenger, especially on the artificial intelligence (AI) side. Meanwhile, Doogan says the “lion’s share” of investment for Causeway is expected to come from the US, though the company is exploring other avenues of investment including grant funding, private equity, and strategic partnerships. Even Wenger notes that, “there’s obviously more capital in the US, but there’s also a different attitude towards risk.” UK investors are more traditional in their expectations for a singular patented asset originating from a spin-out, she explains. Cyclana is taking a platform-based approach that allows for multiple targets and indications; this is a model that, “the US is a lot more comfortable with compared to the UK,” says Wenger. As such, the company is “almost guaranteed” to rely somewhat on the US in the next round of investment, she explains.
Women’s health is dominated predominantly by early-stage companies due to historic underfunding, according to Wenger. While in previous years capital has been reserved for more advanced programmes, she feels that the pre-seed investor mindset is shifting towards openness to funding earlier stages. However, it remains to be seen whether this will translate into similar bets at the Series A level, Wenger notes.
On a macro level, however, deal-making and venture financing still point to a de-risked approach. Late-deal stages (Phase II to preregistration) recorded the highest growth in Q4 2025, a trend that continued in Q1 2026, as per the GlobalData report.
Tech Boom: help or hindrance?
The industry has witnessed a convergence of tech and biotech. An analysis of US VC biotech deals revealed a surge in capital captured by AI-related companies, with their share increasing from 0.25% to 21.85% between 2010 and 2024. In accordance with this trend, experts have identified AI as derisking tool that can help attract investors, pointing to its role as a driving force behind the recent uptick in IPOs, as per BioSpace.
On the other hand, while Doogan recognises AI as a “real boom” for drug development in terms of enhancing efficiency and precision, he argues that it “doesn’t actually help get dollars in the door.” In fact, he raises a concern that the burgeoning tech industry may be funnelling funding away from biotech, describing it as “sucking the oxygen out of the room.”
Targeted fund allocation
In a fluctuating funding environment, Tuscaloosa, Alabama-headquartered biotech Pridcor Therapeutics illustrates a small, targeted funding approach, built on a conservative $6 million Series A raise. “We just raised what we needed to raise,” notes CEO Dr. William Pridgen. Pridgen founded the antiviral-focused biotech Virios Therapeutics, which later became Dogwood Therapeutics. After Dogwood suffered COVID-19 era-related challenges, Pridgen licensed back 23 patents and formed the post-viral syndrome-focused biotech Pridcor Therapeutics. Able to build on the existing preclinical data, the company focused on raising “enough money to pay the attorneys [and] pay for the trial,” with the $6 million providing a runway for 24 months, explains Pridgen. Under this cost-efficient model, Pridgen says, “there should not be a great deal of dilution before we have a monetisation event,” and therefore investors can expect a good return.
